To: Rick D. who wrote (2942 ) 5/4/1998 9:39:00 PM From: Spytrdr Respond to
Just saw this:
Competition calling
Internet telephony gives big phone companies a run for your money
From CNNfn correspondent Tony Guida
May 1, 1998: 8:11 p.m. ET
NEW YORK (CNNfn) - It used to be that consumers looking for
long-distance phone bargains had little choice. Then came the Internet,
which offered virtually free phone calls.
But calling someone over the Internet can be a lot like using a ham
radio: scratchy sound, bad connections, and the need for special
equipment.
That is, until now.
With a new, cutting edge technology known as Internet "telephony,"
almost anyone today can make inexpensive, clear calls over the Internet
without Internet access . . . or even a computer. All a caller needs to
do is dial a special code to connect to the Internet company that serves
as her long-distance carrier.
"This is a revolution. Nineteen eighty-one marked a revolution for the
PCs. Nineteen ninety-eight is the revolutionary year for the
telecommunications industry," says Phil Sirlin, telecommunications
analyst for Schroders.
And like all revolutions, the changes brought about promise to be
far-reaching. The cheap new Internet services are proving that the phone
giants have been charging customers too much, says Internet telephony
analyst Jeff Pulver (158K WAV) or (158K AIF). And that means, according
to Pulver and Sirlin, that Internet phone services may eventually force
big phone companies to cut rates and compete even more fiercely for
customers.
While at the moment only two Internet companies offer mass-market
long-distance service via cyberspace, the savings can be substantial.
Take a one-minute phone call from New York to Tokyo. The standard rate
on a weekday morning can cost you as much as $1.23 from AT&T . . . or as
little as 27 cents from a start-up called IDT. IDT also offers domestic
long-distance service in 50 major cities for as little as 5 cents a
minute through pre-paid calling cards.
The other company, Qwest, is selling a similar service over its own
dedicated network for 7-1/2 cents a minute in nine western cities.
Dozens more companies, including Level-3 Communications and Australia's
OzEmail, are expected to come aboard by the year 2000.
"This trickle to these new providers will start to become a stream, and
from a small stream to a larger stream. There's no reason why they
couldn't take 20 to 30 percent market share, no reason at all," says
Pulver.
Well, maybe one.
Cyberspace carriers are currently exempt from paying the hefty local
access fees that traditional phone companies must pay. But maybe not for
long. Federal regulators are now considering whether to force them to
pay those fees, something Internet carriers fear would disconnect their
expansion in cyberspace before phone competition truly gets on line.
No computer? You don't need it for cheap Net-phone service.
All that's required is your traditional phone.
But inexpensive cybercalls may be short-lived if federal regulators
start charging local access fees.
